Payments to prime contractors will be delayed as the
Pentagon tries to bolster its cash position before across-the-board cuts are
triggered in a little more than week.

According to a report in Defense News, the slowdown will
allow DOD to accumulate about $1 billion in cash, enough to fund a few days of
operations. Contractors will be notified of the payment changes in the coming
week.

The Department of Defense is facing a $46 billion reduction
this fiscal year if sequestration goes into effect March 1. Also, because
Congress has yet to pass an appropriations' bill, DOD is still operating under
the continuing resolution that limits where money can be spent.

The accumulated cash will go into the Pentagon's working
capital fund, according to Defense News, which pays for things such as fuel,
spare parts and office supplies. It is required to keep the account funded;
however, Defense News reports the account is dwindling.

According to its report, DOD typically keeps a week's worth
of funds in the account. The account is down to about two to four days.

Prime Contractors, typically large companies that make bids for projects than utilize subcontractors to complete the work, had been included in the government's
Quick Pay system in 2012. President Barack Obama introduced the initiative in September
2011 with a goal of speeding up payments to small businesses. It was expanded
to include Prime Contractors last year with the idea they would in turn speed
up payments to subcontractors.

If sequestration is avoided, the delayed payment policy will
be reviewed, defense officials said.